How your clients could benefit from thinking about their purpose for saving

It’s easy for business owners to fall into the trap of putting money away each month without really thinking about their purpose for saving.

Saving is a great habit, and it does serve a valuable purpose; throughout their time owning and growing their businesses, it’s naturally sensible for your clients to put some of their earnings away for their futures.

However, while this appears to make sense, many business owners do this without thinking about what this money is for, or even how much they really need.

You no doubt work with many clients like this who are obsessed with the “how much?” when it comes to savings, when what they should really be focusing on is the “what for?”

Building up a savings pot is obviously important, but your clients’ greater priority should be how they’ll spend that money in the future. After all, they don’t want to reach their 90s with money in the bank and a list of unfulfilled dreams.

This outlook, known as “lifestyle financial planning”, is exactly how we approach the work we do for our clients at Henwood Court.

Here’s why your clients could benefit.

Help them plan for the life they want to live

Think about it this way.

Imagine one of your business owner clients. They’re in their mid-50s, married, and have two children. They manage to save around 50% of their income every month.

This client intends to stop working and retire at age 65, when they will then travel around the world with their spouse.

Now picture another one of your clients. They’re in the same or similar circumstances to client number one, also saving 50% of the monthly income they generate.

But, there are two key differences. Firstly, they want to make the most of the time they have in retirement, and so they want to stop working around age 55.

Additionally, they have more modest life ambitions. Instead of travelling, they’re content with staying home and spending time with friends and family, looking after their grandchildren a few times a week and perhaps playing a round of golf on the weekends.

These two individuals may be similar now, but their goals for the future are entirely different.

As a result, client number one will likely need a larger pot to achieve what they want out of life.

Meanwhile, client number two will likely need a bit less, even including the additional 10 years they want to spend in retirement.

So why are they saving the same amount, especially when they don’t even know how much their respective plans are going to cost them?

Goals first, saving later

Rather than working out how to best save their money now, these clients would be better served by starting with how they want to spend it in the future. They should outline their ideal lifestyle first, and then think about the money afterwards.

In this instance, client number one would find far more value in working out how much they’ll need to travel.

Similarly, client number two should focus on the lifestyle they want, and then work out what sort of income they’ll need to support themselves with their humbler ambitions.

By doing so, this would give both clients a concrete figure in mind for how much they’ll need to achieve these targets.

Crucially, this figure would be personal to them. From here, they’d be able to make incisive, more informed decisions with their money that then helps them build towards that number.

For example, client number one might realise that saving 50% of their income isn’t quite enough to meet their targets. As a result, they might need to revise how much they save and invest each month, perhaps making additional pension contributions to boost their retirement pot.

The sooner they have this information, the more time they give themselves to implement strategies that will ensure they achieve these goals.

For client number two, they might find that 50% of their income is more than they need to save. This might allow them to live with more financial freedom than they thought, or even to invest more in their business now to grow it further and leave a greater legacy for their family.

Ultimately, the reason your clients seek support from financial experts like you is so they can have the confidence to spend their money on their goals, not have it sit untouched in a savings account.

So, no matter what their targets are, starting with the “what for?” rather than the “how much?” means you can help your clients to get what they want out of life.

Work with us

Want to help your clients spend their money on their desired lifestyle? You should consider working with us at Henwood Court.

We build personalised financial plans that will allow your clients to live the kind of life they want.

There are plenty of benefits for you in having a relationship with a financial planner like us, including:

  • Knowing you have a trusted planner on hand who you can safely recommend to clients
  • Providing a seamless financial planning experience for your clients
  • Better serving, and retaining, your clients with an expanded range of services to suit their needs.

Email or call 0121 313 1370 to get in touch and start a relationship today.

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0121 313 1370
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20 Country Park View
Sutton Coldfield
B76 1TE